Katherine Mott-Formicola, 54, of Pittsford, New York, has pleaded guilty to charges of financial institution fraud and money laundering, according to the U.S. Attorney’s Office for the Western District of New York. The charges stem from a check-kiting scheme that inflated her account balances to steal millions of dollars. Mott-Formicola faces up to 30 years in prison and a $1,000,000 fine upon sentencing.
Mott-Formicola, who controlled multiple business entities, managed 10 accounts at Five Star Bank and seven accounts at Kinecta Federal Credit Union. Between November 29, 2022, and March 11, 2024, she engaged in the fraudulent check-kiting scheme, writing checks for amounts that exceeded the available balance in one account and depositing them into other accounts she controlled at different financial institutions.
By exploiting the typical practice of making deposited funds available before the originating account balance was verified, Mott-Formicola was able to temporarily inflate her account balances. Despite the checks being overvalued, they were initially honored by the institutions.
Throughout the scheme, Mott-Formicola circulated over 500 inflated checks between her accounts. When balances fell short, she deposited additional checks to maintain the cycle of fraud.
The scheme unraveled in March 2024 when Kinecta Federal Credit Union refused to honor her latest round of inflated checks, leading to a $20.9 million overdraft in her Five Star Bank accounts. By that time, Mott-Formicola had spent the funds on various business ventures and personal expenses, including real estate.
While Five Star Bank was able to recover some funds, it ultimately suffered a loss of $18,979,005.79.
Mott-Formicola’s guilty plea brings closure to the case, but she faces significant prison time and financial penalties when she is sentenced.
